What could make stocks tumble? Watch the energy sector

But Paul Nolte, portfolio manager at Kingsview Asset Management, told clients in a research note published Monday that the sunny market climate isn’t likely to change anytime soon.

The question he’s then asking is what could make this market tumble?

The catalyst, Nolte says, will be something that plants doubt in investors’ minds about the economy’s health, or an interest-rate hike.

An unscientific conclusion, to be sure. But sometimes the simple answer is the best.

“The market has been ripe for a correction for quite some time,” Nolte writes. But the market has been a lazy river, with little change since early May. “Save for two weeks, all the seven major asset classes remain above their long-term averages, which hasn’t been seen since 2010.”

For a clue to the market’s tipping point, watch the energy sector, Nolte says. “If all stays as it is into fall,” he writes, “the energy sector will have led the markets for 5-6 months, the historical length of the past two periods for energy before a market correction.”

But for now, Nolte says to enjoy the summer before the market enters its “scary” season in the aptly named fall. He adds: “There remains little within the markets that are showing much more than modest declines and a resumption to still higher prices in the weeks ahead.”

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